Capital Gains Taxes

[ready4theworld]

I'm not sure if anyone may know the question that I'm about to ask or if I'm in the correct forum to ask, but here goes.... If a person were to sell their current land based residence at a profit and then use all monies collected to purchase a live aboard vessel as their primary residence, would they be responsible for capital gains taxes. I was simply wondering how the government perceives the purchase of a boat as someone's main residence.

[svpattyd]

If u in the US, u can sell a home that u have lived in for 2 of the last 5 years and not pay any tax if the proceeds( profit ) is $250k or under for an individual and $500k or under for a couple. What you do with your money is up to u. No need to purchase another home.

[markpierce]

You may qualify for a $250,000/$500,000 exemption.

See Publication 523 (2010), Selling Your Home

Don't trust anyone giving legal/tax advice on Internet forums.

[Fortytwo]

"According to IRC section 163(h)(4), a boat will be considered a qualified residence if it is one of the two residences chosen by the taxpayer for purposes of deductibility in the tax year. A qualified residence must have basic living accommodations including sleeping space (berth), a toilet (head), and cooking facilities (galley)."

How to Buy a Boat & Deduct the Interest

[roverhi]

Before the Fed's got so generous with the Capital Gains exemptions on your residence, you were able to buy a new home of equal or higher value and transfer your basis on the old house into the new home. If the new home wasn't more expensive than the old, you paid taxes on the difference. A boat used as a live aboard was considered a residence for this purpose. Defered the small capital gains on our house when we bought our Westsail years ago. In those days many houses were cheaper than boats which is probably not the case these days. Believe it is no longer a possibility to do it however. The exemption is so generous that it largely removed the need for deferring the capital gains taxes and they took it out of the law, FWIU. Best to check with a professional who actually knows and keeps up with our 'easy to understand' tax laws.

[Hud3]

You're right, roverhi. The IRS doesn't care anymore whether you buy another primary residence, be it house or boat. That's been the case for some time now, as it applied to the sale of our house in the States five years ago.

[ready4theworld]

The replies are very much appreciated. Thanks much and everyone have a great weekend!

[DavidButler]

I have read an interesting line while reading the rules that you shared via the link."You may qualify to exclude from your income all or part of any gain from the sale of your main home".
I require clarification on this subject along with the example...

[David_Old_Jersey]

Capital Gains Tax? Wot's that, Socialism?

[Doodles]

Originally Posted by markpierce

You may qualify for a $250,000/$500,000 exemption.

See Publication 523 (2010), Selling Your Home

Don't trust anyone giving legal/tax advice on Internet forums.

This is so true .... however, the advice in posts #2,3,5 & 6 are correct. Post #4 is correct but not relevant to your question.

Doodles, CPA